₹25,000.00 - ₹25 Cr
Loan of up to 80% of policy value| Funding against policies under lock-in period
Overview
What is Loan Against Mutual Funds - Everything You Need to Know
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What does pledge of mutual funds mean?
In summary
Pledging mutual funds can help access liquidity while allowing you to retain ownership of your investments. Key points to remember include:
- Mutual fund units are pledged as collateral instead of being redeemed.
- Bajaj Finance accepts more than 5,000 mutual funds from over 40 asset management companies.
- Eligible equity mutual funds may offer LTV of up to 50%, while eligible debt funds may offer up to 90%.
- A lien is marked on the pledged units, restricting redemption, switching, and transfers until it is released.
- The loan eligibility depends on the current value of the pledged units and the applicable LTV.
Pledging mutual funds provides liquidity without requiring redemption. Consider these essential facts before creating a pledge. Bajaj Finance accepts more than 5,000 funds from over 40 asset management companies. Equity mutual funds can provide LTV up to 50%, while eligible debt funds can provide up to 90%.
Pledging mutual funds means offering selected units as collateral without selling them. The lender marks a lien and calculates eligibility using their current value and applicable loan-to-value ratio. You retain ownership and market exposure. However, redemption, switching, and transfers remain restricted until the lender releases the lien.
Which mutual funds are eligible for pledging?
Eligibility for pledging depends on the mutual fund category, liquidity, valuation, and risk criteria. Owning a scheme does not guarantee acceptance.
| Fund category | General eligibility position | What borrowers should verify |
| Equity mutual funds | Selected schemes may qualify | LTV and current NAV |
| Debt mutual funds | Eligible schemes generally receive higher LTV | Approved scheme status |
| Hybrid mutual funds | Acceptance varies by composition | Classification and LTV |
| Liquid or overnight funds | Selected schemes may qualify | Available units and valuation |
| ELSS or specialised funds | Eligibility may be restricted | Lock-in and approved list |
Sectoral, thematic, small-cap, international, or illiquid schemes may be excluded. Check the current approved list before applying.
For more clarity on eligibility and other common queries, explore these loan against mutual funds FAQs.
Documents required to pledge mutual funds
How to Secure a Rs. 2 Crore Loan Against Securities Instantly
Bajaj Finance generally requires three records:
- PAN card: Supports identity and tax-record verification.
- KYC document: Aadhaar, passport, or voter identity card.
- Consolidated Account Statement: Verifies fund folios, schemes, units, and ownership.
Registered mobile, email, and bank details may also be required. Matching records prevent authentication and lien-marking delays.
How to pledge mutual funds: Step-by-step process
The Bajaj Finance application and lien-marking journey is digital.
Steps to pledge mutual fund investments
- Visit the Bajaj Finance loan against mutual funds page and select Apply Now.
- Enter your personal, PAN, email, and registered mobile details.
- Complete OTP verification and permit portfolio retrieval through CAMS or KFintech.
- Review your holdings and select schemes appearing on the approved list.
- Choose the eligible units that you want to offer as collateral.
- Review the loan limit, LTV, interest rate, fees, and repayment terms.
- Authorise lien marking using the OTP sent to your registered mobile number.
- Complete KYC, link your bank account, and accept the loan agreement digitally.
Receive funds in your linked bank account after approval and lien confirmation.
The entire process is paperless, fast, and usually takes less than 24 hours once verification is complete. For a more detailed understanding of how to pledge mutual funds for loan, including CAMS/KFintech authentication and OTP lien confirmation, check the complete step-by-step guide.
How much Loan-to-Value (LTV) can you get by pledging mutual funds?
How to apply for Bajaj Finance loan against shares
LTV is the percentage of pledged portfolio value available as a loan. Bajaj Finance provides up to 50% against eligible equity funds and 90% against eligible debt funds.
| Pledged fund type | Maximum stated LTV | Illustrative value | Illustrative maximum limit |
| Eligible equity mutual fund | Up to 50% | Rs. 10,00,000 | Up to Rs. 5,00,000 |
| Eligible debt mutual fund | Up to 90% | Rs. 10,00,000 | Up to Rs. 9,00,000 |
Actual offers depend on eligibility, available units, prevailing NAV, and assessment. Maintaining an LTV buffer reduces shortfall risk.
Costs, charges, and hidden fees in pledging mutual funds
Review every applicable cost, not only the interest rate. Bajaj Finance currently states these charges:
| Charge | Current applicable terms |
| Interest rate | 7% to 12.25% p.a., charged on the utilised amount |
| Processing fee | Up to 4.72% of the loan amount, inclusive of applicable taxes |
| Full prepayment, sanction up to Rs. 5 Cr | Nil |
| Full prepayment, sanction above Rs. 5 Cr | Up to 4.72% of the outstanding amount, inclusive of applicable taxes |
| Part prepayment, sanction up to Rs. 5 Cr | Nil |
| Part prepayment, sanction above Rs. 5 Cr | Up to 4.72% of the prepaid principal, inclusive of applicable taxes |
Individual and MSE borrowers with floating-rate loans may qualify for nil prepayment charges under stated conditions. Check the sanction letter for other event-based costs.
Risk factors of pledging mutual funds
Features & Benefits for Bajaj Finance loan against shares
Following are the risk factors of pledging mutual funds:
- Market risk: Declining NAV can reduce collateral value and drawing power.
- Margin shortfall: Falling coverage may require additional eligible units or partial repayment.
- Liquidation risk: Unresolved shortfalls or defaults can lead to the sale of pledged units.
- Restricted access: Lien-marked units cannot be redeemed, switched, or transferred.
- Interest accumulation: Longer borrowing periods increase total interest costs.
Concentration risk: Pledging most holdings leaves fewer unencumbered assets for emergencies.
Despite these risks, pledging remains safer than liquidating long-term holdings during short-term cash needs. To better understand the risks and make an informed decision, explore these Things to know before taking loan against mutual funds.
Things to keep in mind before pledging mutual funds
Following factors should be considered before pledging mutual funds:
- Borrow only the required amount because interest applies to the utilised balance.
- Maintain an LTV buffer instead of withdrawing the maximum available limit immediately.
- Review NAV, drawing power, interest, and lender alerts regularly.
- Avoid pledging units allocated to a goal approaching within the loan tenure.
- Compare borrowing costs with partial redemption and suitable alternatives.
- Obtain formal closure evidence after clearing all dues.
Stay in control of your investments and finances. Leverage securities smartly to access funds with confidence.
Conclusion
Eligibility criteria for Bajaj Finance loan against shares
Pledging mutual funds can provide short-term liquidity while keeping eligible investments intact. The decision still requires careful scheme selection, cost comparison, and repayment planning. Check the approved list, applicable LTV, interest rate, fees, and margin requirements before proceeding. Monitor the pledged portfolio throughout the loan tenure, maintain adequate collateral coverage, and clear all dues promptly so the lender can release the lien without avoidable delays.
Unlock the potential of your investments today. Apply for a loan against mutual funds and access instant liquidity when you need it most.
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Frequently asked questions
General
Which mutual funds are eligible for pledge?
You can pledge most equity, debt, hybrid, and liquid mutual funds approved by the lender. However, high-risk or sector-specific schemes are often excluded. Eligibility depends on the fund’s liquidity, market stability, and lender’s acceptance list.
How much loan (LTV) can I get by pledging mutual funds?
You can typically get up to 50% of the NAV for equity funds and up to 90% for debt funds. The exact Loan-to-Value (LTV) ratio varies by lender and the type of mutual fund pledged.
What fees are involved in pledging mutual funds?
Charges usually include interest (8% p.a. to 15% p.a.), a processing fee (up to 4.72%), and stamp duty. Some lenders may also levy nominal prepayment or foreclosure charges.
How do I release the pledge on my mutual funds after repayment?
After you pledge mutual funds, full repayment lets the lender initiate release within one to two business days. Track the mutual fund pledge process through OTP-authenticated My Account.
Can I pledge mutual funds for a loan online without visiting a branch?
Yes. How to pledge mutual fund units for a loan online is fully digital with Bajaj Finance: select eligible units, approve NSDL or CDSL pledge through OTP, then apply now.
Disclaimer
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